Turkey’s Central Bank has increased its key interest rate to 25%, more than the 20% that economists expected. Following the news, the Turkish Lira has gained slightly against the Dollar and the Euro.The aggressive move comes as a shock to observers, as the previous primary policy rate stood at 17.5%. The hike indicates that Turkey is further away from President Recep Tayyip Erdoğan’s unconventional economic policies, dubbed “Ergonomics”.The decision to raise borrowing costs comes amidst an inflation rate of 47.83% in July, which peaked at over 85% in October. However, independent economists argue that the actual inflation rate almost reached 123%.President Erdogan has assembled a new economic team, signaling a return to more orthodox approaches. He even appointed Hafize Gaye Erkan as the first woman to hold the position of central bank governor. Since Erkan’s appointment, the central bank has increased the key policy rate by 6.5 percentage points to 15% in June and then by an additional 2.5 percentage points to 17.5% in July.After the announcement, the Turkish Lira strengthened against the US dollar and Euro. When writing, the Lira was up 6.15% against the greenback and 6.30% against the Euro. It remains to be seen if President Erdogan approves the interest rate hike.
| Information | Details |
|---|---|
| Geography | Europe |
| Countries | 🇹🇷 🇺🇸 |
| Sentiment | neutral |
| Relevance Score | 8 |
| People | Hafize Gaye Erkan, Recep Tayyip Erdogan |
| Companies | Central Bank of Turkey, CoinChapter.com, Google Finance, Monetary Policy Committee, Turkish Lira |
| Currencies | Turkish Lira, US Dollar, Euro, Bitcoin, Ethereum |
| Securities | None |
